McDonald's sales worst in 10 years

Education Reporter

Food scares in Asia, huge competition in the US and the global trend towards healthier eating have hurt McDonald's sales.
Photo: AP

Sales at McDonald's fast food outlets have recorded their worst results in over 10 years.

Global sales at the fast food giant dropped 2.5 per cent in June and July.

Not since March 2003, when global sales plunged 3.7 per cent in consecutive months, has the world's biggest restaurant chain suffered such losses.

A pedestrian walks past an advertisement for McDonald's in the Futian district of Shenzhen, China, where sales have been hit hard after a McDonald's supplier was accused of repackaging old meat. Photo: Bloomberg

Australia is part of McDonald's Asia Pacifc Middle East and Africa operation, which was the worst performing sector in the second quarter of 2014. Its sales declined 7.3 per cent.

After similarly disappointing first quarter results, Australia was singled out as a poor performing market in April.

McDonald's chief executive Don Thompson described the Japanese and Australian markets as weak.

"Looking forward, McDonald's is focused on stabilising key priority markets including the US, Germany, Australia and Japan," he said.

A spokesperson for McDonald's in Australia said: "Despite a challenging environment the Australian business is still strong and growing as we continue to offer our customers top quality food and great value."

The disappointing global results in June and July come on the back of food scares in Asia, huge competition in the US and the global trend towards healthier eating.

It has been a horror couple of months for the multinational.

In July, McDonald's came under fire after it emerged that its workers in China were repackaging expired meat, prompting food safety concerns.

McDonald's subsequently stopped using the supplies from the OSI plant in Shanghai, preventing many of its Asian restaurants from serving marquee sections of its menu, including Chicken McNuggets and Big Macs.

Then on July 31, McDonald's was ordered to pay damages of $27 million after claims of relaxed security led to the deaths of two Texan teenagers.

One of the American victims, Denton Ward, 18, was beaten to death by a mob at a McDonald's in Texas in 2012.

His partner, Lauren Crisp, 18, was killed in a car accident as she tried to get Mr Ward to hospital.

The families of both the victims sued McDonald's, claiming that the chain did not protect the teenagers at its franchise in College Station, Texas.

The Texas state court jury awarded Ward's family $US16 million and Crisp's family $US11 million.

A McDonald's spokeswoman said that they will appeal against the decision.

“We respectfully disagree with the jury’s verdict,” she told Bloomberg.

In Australia, McDonald's has come under criticism from health groups for its home delivery service, which is part of its strategy to stabilise the Australian market.

Queensland's Australian Medical Association president Dr Shaun Rudd said he was concerned about easier access to junk food.

"I think unfortunately they'll sell more food and that means there's going to be more burgers and more fries eaten by the population there, and they are already extremely overweight."

Despite these concerns the rollout of home-delivery in some suburbs across Australia has been a commercial success, with McDonald's planning on extending the service.

"Our customers have often said they like the idea of Macca’s delivery so we’re currently trialling it in a number of our restaurants," a McDonald's statement said.

"We will look to extend the service once these trials are completed."

The chain has also come under fire, along with its competitors, for advertising to children.

A Cancer Council study found that a loophole in the advertising code, allowed them to advertise higher-calorie adults meals to children.

“Our study found foods like KFC’s Mint Choc Krusher and McDonald’s Chicken 'n’ Cheese Burger, which aren’t children’s meals, can still be advertised to children," the Cancer Council study revealed.

Meanwhile, some of McDonald's competitors are reaping the rewards of its troubles.

Burger King Worldwide posted its third consecutive report of sales growth in the US and Canada.

While investors and analysts have pointed to the success of US-based stores such as Chipotle Mexican Grill and In-N-Out Burger for adopting a limited menu over the "all in one" approach of McDonald's.

McDonald's has more over 35,600 restaurants around the world, 19 per cent of which are owned by the company.

By 2016, the chain is seeking to franchise a further 1500 of its company-owned stores, primarily outside the US market.

Shares of the Illinois-based McDonald’s dropped 21 cents to $US93.10 at the close of trade on Wall Street on Friday.